George Soros, one of the world’s most successful investors and boldest philanthropists, has been more perceptive than almost anybody on the economic crisis – warning about “market fundamentalism” and the emerging credit “superbubble” since the 1980s. “The idea that financial market are self-correcting,” Soros writes, “remains the prevailing paradigm.” And it is wrong.
Rather than thinking markets are always right, Soros thinks of markets as “almost always wrong” – and has made billions by trading on this insight.
Now nearing 80, Soros’ observations carry more weight than ever. The new edition of The Crash of 2008: the new Paradigm for Financial Markets is Soros’ 11th book – and his first bestseller. In it he explains his theory and argues that clean energy investments are central to macroeconomic policy.
Soros’ theory – called reflexivity – states that human events are inherently unpredictable because people’s perceptions affect the underlying reality of the situation. For example, stock prices at any given moment more accurately reflect the prevailing bias of the market – greed or fear on the extremes – than the underlying value of the company.
Soros, an early Obama supporter, has generally supported the president’s policies on stimulus, bank intervention, and clean energy legislation. “Energy policy could play a much more innovative role in counteracting both recession and deflation,” Soros argues. “The American consumer can no longer act as the motor of the global economy. A new motor is needed. Alternative energies and energy savings could serve as that motor, but only if the price of conventional fuels is kept high enough to justify investing in them. That might also help to moderate price deflation.”
“Neither energy security nor the control of global warming can be achieved without putting a price on carbon emissions,” Soros writes. “The United States cannot do it alone, but it cannot be done without the United States taking the lead.”
Interesting guy. I totally agree that for to long the American consumer has been the motor for the national and global economy. I heard the Mayor of Michigan state today that the Phoenix that rises up out of the ashes of the auto industry in her region will be a different animal, perhaps the clean, renewable energy’s scaling effort will be what’s coming off the production line?
Chad M. Wall
Certainly having one of the world’s most successful investors advocating investment in clean energy is an excellent boon to our industry. It is a bit disconcerting that he believes that the only way alternative energies can become a motor of the world economy is for governments artificially bias the playing field against the use of conventional fuels (which I assume he means by way of taxation and tariffs). If he is correct, it does raise concerns about long term sustainability of our industry in a free market environment especially if the global economic downturn continues for an extended period.
Soros, like many others, believes the energy playing field has long been artifically biased toward fossil fuels because producers and consumers don’t have to pay the costs of carbon – in terms of pollution, CO2 emissions, paying for the 5th Fleet, etc. Soros argues that putting a price on carbon will LEVEL the playing field.
Soros is right on 2 notes: 30 years ago economic vitality used to be measured by production & productivity metrics, not consumption. Thinking we can consume ourselves into prosperity is generally stupid. He’s even more correct that if we as a Nation focus on getting off of oil & coal ASAP, the subsequent demand for innovation, invention, engineering, manufacturing, IP, IT, etc. can be the core driver and new paradigm for our 21st century economy, and keep us busy, productive & prosperous for a long, long time. And oh yeah … save the planet in the process!
Soros backed the Obama agenda while betting in the dollar’s value going down. He’s made millions during the economic crisis in part because the Administration policies have hurt the American dollar. As for the economy needing a new motor, how exactly will alternative energies be that motor? We are a capitalist society (for now, at least) that is driven by the consumer. The Government is trying to artificially create the “new motor” by increasing fuel prices (explain the recent 25% increase in gas prices)and by investing stimulus money in green technology that is not ready for prime time. None of the current alternative energy sources available can compete with coal based plants or more importantly, nuclear power.
If the US becomes a global leader in developing/ producing clean energy technology, we can export that around the world. Every dollar of energy we produce in the US is $1 we don’t send abroad, improving our balance of trade/debt situation. I guess we’ll see if green technology is ready for primetime!
George Soros without a doubt a very wealthy man. Just a little looking into who he is will show he is a Socialist to the core pushing a Marxist economic model & is adored by the current administration along with both houses of congress. As pointed out by VL-NY he has made his fortune on the backs of other peoples misfortune. Since the Great Depression, our government has slowly been dismantling our capilist society. This dismantling of our economic system was excelerated via The Great Society & is now being broken down at the fastest pace ever seen since January 2009. Since the ’70’s our manufacturing base has been dismantled & sent overseas to our enemies & allies through the most creative & succesful government control mechanisms ever created known as the EPA. The second most succesful way of dismantling our economy has been through unbridled defecit spending of our government, entitlement programs, & class warfare. Because of all this our great nation & it’s citizens are held captive by the Communist Chinese who hold our debt. Without a doubt, the development of Clean Energy Technology has to be done, but in a responsible, methodical, & responsible way. It should be a part of the solution for the world’s energy requirements…not the entire solution. Just a quick look at what drives this movement & it will be revealed the Cap & Trade TAXES, pushing unproven economic, technology, & unproductive methods of energy production is by the few “preachers” who desire to make gold out of CO2 & to control the masses.
Your info on Soros is completely wrong. Soros fled the Communist takeover in Hungary after his family helped Jews escape from the Nazis. He made his money by working on Wall Street for decades, then turned around and used that money to fund the anti-Communist Solidarity movement in Poland and dissidents in the USSR. In short, he’s squarely against Marxism and that’s clear by looking at his words and actions throughout his life.
And if Soros really made his money off other people’s misfortune, then I think that disqualifies him from being a Marxist.
The problem with the view point that taxation on oil will level the playing field is wrong headed on several points. First, it assumes a steady state economy. Any tax pressure applied to the oil industry does not occur in a vacuum, it will effect the entire economy. The unintended consequences for industry in general, and the the alternative energy industry specifically, is that all of our raw materials to manufacture, will also become more expensive along with transportation costs for all of our products. Also by taking more money out of the private sector (since everyone will be paying more for everything if Cap & Trade passes) there will actually be less and less money available to fund the large scale alternative energy projects over time. Since the competitive cost per kilowatt hour is currently the only thing holding back many alternative energy projects, by making them even more costly to produce through taxation of oil would kill the industry entirely.
P.S. – I think if you check history you will find most Marxists made all of their money off of other people’s misfortune.
I think you should probably just read his book. Your assumptions are wrong, your conclusions flawed. Soros does not assume a steady state economy – quite the opposite, and he is not a Marxist.
Not sure if Soros can be described as pure Marxist, or pure socialist, but he certainly holds belief in a combination of the two philosophies. His blatant support of a socialist political agenda, and of organizations that are obsessed with overturning the US Constitution and Bill or Rights pretty much reveal his true nature.
Here’s an idea: how about everybody read his book? Then we can discuss this intelligently instead of delusional nonsense about Soros being a Marxist.
After reading the article I find it somewhat disingenuous that I was told by one of Mr. Soros’s foundations that they are not interested in supporting novel ideas related to clean energy!?
However, I admire Mr. Soros for his accomplishments and for some of the ideas in his books. He is without doubt one of the most outstanding and most unique world citizens.
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